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28 February, 11:04

X, Y, and Z have capital balances of $90,000, $60,000, and $30,000, respectively. Profits are allocated 35% to X, 35% to Y, and 30% to Z. The partners have decided to dissolve and liquidate the partnership. After paying all creditors, the amount available for distribution is $60,000. X, Y, and Z are all personally solvent. Under the circumstances, Z will:

a. receive $18,000b. receive $30,000c. personally have to contribute an additional $6,000d. personally have to contribute an additional $36,000

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  1. 28 February, 11:25
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    C) personally have to contribute an additional $6,000

    Explanation:

    X's capital balance = $90,000.

    Y's capital balance = $60,000.

    Z's capital balance = $30,000.

    The partnership lost $120,000 which must be covered proportionally by the partners:

    X has to cover 35% of the losses = $60,000

    Y has to cover 35% of the losses = $40,000

    Z has to cover 30% of the losses = $36,000

    Since Z's capital balance is only $30,000, he owes the partnership $6,000 because his proportional losses were larger than his capital balance = $36,000 - $30,000 = $6,000
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